Informational Interview

I interviewed my father, Louis Brienza. He owns a Dunkin Donuts in Bethpage, NY. My father manages the day-to-day operations and deals with the financial end of the business. He makes all business decisions for the company ie: loans, real estate, expansion, and banking. He looks for employees that are outgoing, reliable, confident, and who can communicate well with customers. The entry level jobs in his business include crew-members that handle customers, bakers who handle the manufacturing of the products, and store managers. I also learned that in recent years there has been a decrease in sales due to the recession our economy has been facing. The customers are cutting back on there discretionary income. Some businesses will see an increase in the next five years because the financially strong companies will stay in business and build while the weaker companies end up closing. This will create less competition, therefore, increasing the sales of the bigger companies.

Informational Interview

I interviewed Edward Din, owner and manager of Wong's Chinese Restaurant in Norfolk, Virginia.  From this interview, I was able to gain an insight into a family-run business and how it is affected by seasonal changes.  Mr. Din and I spent the majority of the interview discussing how his restaurant's business is affected by its location as it sits on the beach.  In the summer, Mr. Din employees many employees because the restaurant sees a lot of customers in the warm weather.  Once the season's start to change and the temperature cools, the restaurant loses many of its customers and they are forced to let non-family employees go until business once again regains momentum.   I had never thought before how the economics of a business could be affected by its location and and the regional weather.  It makes me wonder how many other restaurants see a change in profits and have to let their employees go at certain times of the year and how important it is to those restaurants when they open.  I thought the interview was definitely beneficial because I learned about a different aspect of the restaurant industry.

Informational Interview

I interviewed Steve Efstathiou, owner of three diners in New York and Virginia. The interview was very helpful in understanding the competition in the restaurant industry. Mr. Efstathiou informed me that the industry is very competitive. The increase in national chains, for instance, Chinese and Italian chains, has made it hard for diners to gain support, especially with the economy how it is now. He said the restaurant industry was hit hard five years ago and he has seen a turnaround this year that he expects to last into the future. To gain consumers, restaurants must differentiate themselves from others. The main way restaurants differentiate themselves is by pricing. Offering 2 for the price of 1 meals, and discounts draw consumers in. I mentioned the high demand of diners in the area, especially around the college where students see many diners in their hometowns, and he said that he would love to open one around the school but property prices are way too high. This is very important to consider when opening a business since you need to be able to cover your costs.

Informational Interview

My informational interview was with Mr. Brett Kelly, the co-owner and co-manager of a small business restaurant named "La Terrazza". It is located in New City, New York. Mr. Kelly and his friend began the Italian restaurant 16 years back. As of now, he has 40 employees. As the manager, he is in charge of scheduling staff, purchasing items, booking affairs, printing/updating menus, having owner/manager responsibilities, and assisting for the hosts if needed. During the interview, he spent time explaining the different types of entry-level jobs. He focused on the "front of house" staff, which include waitresses, head waiter, booking manager, and assistant managers. However, his main focus however was on chefs. His small business has 6 different chefs, including preparation/salad chef, broiler chef and executive chef.
A really interesting part of the interview was when he explained the recent increase/decline in certain jobs over the past few years. He has noticed that weekly dinners (from Monday-Thursday) have declined over the past few years. Mr. Kelly states this is a direct effect from the recession - many people do not have the time or money to go to restaurants on weeknights. He also stated his restaurant is becoming increasingly popular for events - such as weddings, birthday parties, retirement parties, etc. The part of his business that was most striking to me was his staff is mostly made up of full time workers. These full time workers include teachers and nurses - workers who are looking for more ways to "make ends meet." I did not realize that some restaurants may participate like this. Speaking with him showed me how difficult it is to run a small business, especially during a recession. However, it also showed me how rewarding it can be.

Informational Interview

My informational interview was with Valarie Zuffanti, the Senior Sales Manager at the Ritz Carlton Corporations in Boston, Massachusetts. Her hectic day starts at 8:30 am, which is when the staff meets to discuss their goals for the day, any important guests that are arriving (since the hotel is a high-end one), etc. This meeting will last approximately 30 minutes, until nine am, when the group breaks off, and starts accomplishing their goals. Currently Valarie is figuring out the price of beds in the hotel- meaning at The Ritz Carlton- for the next year, 2011. During the day, Valarie will also talk with clients in the companies target audience, such as workers at Goldman Sacks, to make sure they are aware of the great deals at The Ritz Carlton. Prior to the stock market crash, the primary consumer of The Ritz Carlton's services were Wall Street workers, but since the crash in 2008, there has been a complete shift. This shift has come from financial workers no longer bringing in income for The Ritz Carlton employees, since they cannot shell out the expensive room rates. Hence one reason the hospitality industry has been declining, even for the upperclass workers, who have not been as taken aback by the financial crisis of 2008. Despite the 80 percent of Ritz Carlton clients that were in administration, and the financial sector; the hotel industry is beginning to buzz again. Although, this is not in full swing, there is an increase in the number of jobs, due to a somewhat stable footing in the stock market, and more jobs- such as security, bell hops, and front desk receptionists; have been desired from this increase.

No toy without certain fat restrictions

Recently a bill was passed by the San Francisco Board of Supervisors that states that restaurants cannot give away toys in their meals unless they meet certain health requirements regarding fat, calories and sodium.  The bill, which blatantly takes on the Happy Meal, was headed by Supervisor Eric Mar after he became horrified by his daughter's growing collection of free toys.  He believes this new rule is a way to counter the fatty, salty fast food.  Mr. Mar has said that he hopes this will act as an incentive for fast food companies to "provide better choices".

A spokeswoman for the company has said that she does not believe that this is what customers want "nor is it anything they asked for".  The mayor, Gavin Newsom, was also not pleased with this new ban and had hopes to veto it because he does not think this will fight child obesity.  The boards counter fact was that roughly 30% of the city's fifth graders are overweight, which is an extremely scary statistic considering the Happy Meal is aimed towards their age group. "Under the bill, any meals will have to have fewer than 600 calories, fewer than 640 milligrams of sodium and less than 35 percent of calories from fat (with an exception for some healthy items, like nuts)." If restaurants fail to adhere to these policies, then no toy for their customers.

I believe that this is a smart move for the city as child obesity is one of the biggest growing problems in the country. I think that this will be an incentive for children to choose healthier options as the toy is the rewarding piece of the meal. Hopefully this new standard will convince fast-food restaurants to serve healthier meals as they will begin to see what their customers are drawn too.

Minimum-Wage Debate Divides Hong Kong

In response to growing public calls to tackle the widening wealth gap, lawmakers passed the minimum-wage bill after a 41-hour session in July. Some of Hong Kong's lowest-paid workers, such as toilet cleaners or security guards, earn as little as HK$20, or about US$2.60, an hour. A Provisional Minimum Wage Committee appointed by the government has yet to recommend a new the hourly rate. HK$28 per hour is the median between what labor representatives and business groups are calling for.

A dispute between labor groups and the business sector last week raised the question of whether a minimum wage might backfire more directly against the workers it is meant to help. Trade unions called for a boycott of one of the city's largest fast-food groups, Café de Coral Holdings Ltd., which operates restaurants in Hong Kong as well as the Manchu Wok chain in North America (Steger).

While the minimum-wage law has yet to take effect, Café de Coral last month acted pre-emptively by increasing hourly pay by between HK$2 and HK$3.50 (Steger). However, because the company eliminated a paid 45-minute paid daily lunch break, the move turned into a public-relations fiasco. Employees found out their original earning of $22 an hour would end up being less less each month if they worked eight hours a day, 26 days a month. The boycott plan soon followed.

Hong Kong Chief Executive Donald Tsang, addressed to business groups that the government was forced to legislate a minimum wage after a "tepid" response from the business community to a voluntary plan for a minimum wage proposed in 2006 (Steger). "[T]ensions are developing in society because the fruits of the economic recovery have not trickled down to all levels of the community," said Mr. Tsang. "Some people feel that they are being ripped off" (Steger).

Workers will not only respond to low wages with boycotts; but it will also be reflected in their work ethic. If employees at restaurants are not working as hard this will directly affect customer satisfaction. Meals may not be prepared as quickly or there mite be less effort put into making them. If the workers got paid normal wages all the disputes between employee and employer will be settled and the consumer will be happy.

http://online.wsj.com/article/SB10001424052748704737504575601832288088158.html

Rise in Input Prices Causes Higher Prices for Consumers

Prices of milk, beef, coffee, cocoa and sugar have gone up recently and restaurants are raising their prices to make consumers bear most of the cost. However, this could cause problems for the restaurant industry because of the position many consumers are in. With high unemployment consumers have found ways to save extra cash by not going out to eat as much, or buying generic brands.

Cheif executive of Stater Bros. Market, a grocery store chain in California said, "The big challenge will be, how much can we swallow and how much can we pass along?" Recently, cereal prices for Stater Bros. has risen 5%. They dealt with this increase by passing half the cost onto consumers, by rising the prices they pay, and by bearing the other half of the cost by cutting other expenses.

Starbucks has decided to leave the costs of their coffee the same, to keep from losing supporters of their main product, but to rise the prices of other harder to make drinks. Kraft, General Mills, and Safeway have decided to pass the rise in prices on to the consumers.

Foood prices are rising faster than overall inflation. The CPI (consumer price index) for all items minus food and energy had risen 0.8% up until September. The Bureau of Labor Statistics has recorded this as the lowest 12-month increase since 1961. However, the food index rose 1.4%. It is predicted that overall food inflation will be at about 2% to 3% next year.

If overall inflation does not begin to rise more sharply then I think the restaurant industry is going to take a huge hit. They will not be able to put a 2% to 3% rise in prices on consumers within the next year. They will have to take some of the burden and cut their costs just as Stater Bros. Market has done. Otherwise, consumers will find the cheapest prices and resort to them if they have to.

http://online.wsj.com/article/SB10001424052748704506404575592313664715360.html?KEYWORDS=restaurant++industry

Can Starbucks Adapt Like McDonald's Has?

According to Forbes, starting seven years ago, McDonald's Corp has been growing slowly in the total amount of restaurants. Also, for the past seven years, McDonald's has been making a serious effort at "smarter more cost-efficient operations." In turn, this change has increased McDonald's stock.

Starbucks, on the other hand, has only recently decided to enter the "slow growth stage". Since then, the company has closed 1,000 locations and similar to McDonald's, tightened up its operations. This has also led to an increase in Starbucks' stocks. Another important change Starbucks is pursuing is making more of its stores licensees. This is also similar to McDonald's.

The article states that McDonald's has a better profit margin due to its "larger network of franchisees." Furthermore, the productive at McDonald's restaurants has risen over the past few years, because of new menu items, cleaner restrooms and faster drive-through times.

With McDonald's as its model, Starbucks is trying out the same idea. Though Starbucks is trying, it is too early to tell if the company is making any progress.

I think Starbucks has the potential to adapt like McDonald's does, but not in the same magnitude. Even though the two companies "operate from very similar real estate" by hiring the same workers and competing for casual dining and snacking spending by consumers, I think McDonald's has more of an edge over Starbucks. McDonald's offers more selections than Starbucks does, it has been around much longer than Starbucks has, and its restaurants are open longer than Starbucks' restaurants on average. Based on the article, it would be great if Starbucks can adapt because it would most likely lead to greater shares, but I am not sure if Starbucks is the type of restaurant that should adapt in the way McDonald's has adapted.

http://blogs.forbes.com/investor/2010/11/04/can-starbucks-adapt-like-mcdonalds-has/

Low Cost Comfort Foods Save Restaurants

Restaurants in the Bay Area of San Francisco were hit hard by the recession, just as everyone else had. However, restaurants are very vital to San Francisco because they draw in many of the tourists. Employment in San Francisco has declined about 6% over the past year, a result of restaurants unable to adjust to the changes in the economy.

Several restaurants have adjusted to the economy by increasing comfort foods, like fried chicken and pizza, and and cheaper menu items on their menus. Those who have failed to do this, have gone out of business. Even restaurants who have adjusted their menus have not all found success.

Anne Le Ziblatt, owner of Tamarine in Palo Alto, has added more affordable dishes to her menu. Rather than serving the same dishes that range from $14 to $28, she began selling Vietnamese dishes that sell for $13 each. This has helped Ms. Le Ziblatt's business to increase 15% from last year.

These kinds of changes have made the future look promising for the Bay Area restaurants. Restaurant employment has decreased at a slower rate than overall employment has in the Bay Area over the past two years. Some restaurants have even found the opportunity to expand higher end restaurants. The most important fact however, is that customer numbers are increasing to pre recession numbers. For without the customers, restaurants can not make a comeback.

http://online.wsj.com/article/SB10001424052748704141104575588982760967058.html?KEYWORDS=restaurant+industry

Holiday Inn to Turn Bars into Social Hubs

According to an article in the WSJ, Holiday Inn intends to "edesigning and expanding its hotel bars to make them livelier." Holiday Inn is a part of InterContinental Hotels Group. InterContinental's reasoning for turning Holiday Inn's bars into social hubs is "dogged midmarket full-service hotels" with 150 rooms or less do not have enough customers to provide full-service food 24/7 that will make a profit.

Another reasoning is frequent customers of Holiday Inn, which are primarily "middle managers, route salespeople, entrepreneurs, and government supervisors, want to be around other people than holed out in their rooms." Holiday Inn came across this through a survey it offered to its most frequent customers. It is replying to its customer's wants.

The way Holiday Inn is approaching this request is impressive. By making the bar area more of a social hub, Holiday Inn plans to have the bar staff serve food, which would allow the hotel to reduce restaurant staff - which will reduce labor cost. This applies to all meals during the day. For breakfast, there will be "buffets and cook-to-order stations." This will also cut labor costs for the Holiday Inn.

However, Holiday Inn will "go slow" with the idea of social hubs, especially because most of its hotels are owned by franchisees. The social hubs will be tested in newly renovated and newly built hotels, most likely beginning in 2012. Holiday Inn is planning to have all of its hotels have the new menus and the breakfast programs (at the least) by 2012. The "pricier changes" will probably happen while the hotels are under periodic renovations. As of right now, Holiday Inn does not have an estimate of the cost of installing these hubs because "the concept is likely to undergo changes during the test during next year."

I think this is a great idea! I feel like these midmarket full-service are too impersonal (obviously not for the people sharing a room). The feeling of these types of hotels are "come in, sleep, wake up, leave, do work, come back," and restart the cycle. There aren't many opportunities in these hotels to meet other guests. Even though some people think of a hotel as just a place to sleep on the go, I believe they will benefit from these social hubs. I also believe these social hubs will attract more people to the hotel, which should raise its profits and help the hotel industry recover in general.

http://online.wsj.com/article/SB10001424052702303443904575578613162270270.html?mod=WSJ_Hospitality_leftHeadlines

City Center failing to pay bills

Last December, the City Center in Las Vegas opened amidst the largest decline in tourist travel in decades. This project, roughly worth 8.7 billion dollars, is more than just a hotel: there are condominiums, a casino as well as a giant mall.  The hotel was supposed to start a new wave of "sophistication and urban living in the gaming capital".  But the innovation of this building has almost been over-shadowed by its huge scale and cost.  There is an outlined plan to seek relief for $1.8 billion loan, but if terms cannot be negotiated then City Center could be responsible.

MGM resorts reported a net loss of $1 billion, which includes a write-down of nearly $600 million.  Also the hotels worth has reported fallen from $5 billion to $2.4 billion in a single year.  MGM is still spending money to end construction as well as keep operations at City Center going.  There was a report in July that stated within a year City Center would see major improvements and for right now they have seen an increase in earnings, yet the hotel is still on track to violate their loan.

The cost control problems with City Center have seemed to induce problems between the partners as some wish to close certain operations while others believe it would be more detrimental to the center.  The executives are also faced with what to do about the nearly 2,000 condos that are unsold.  At first the 2,400 condos were expected to produce a revenue of $2.7 billion, but now the total sales are $372 million.  By maintaining 530 of these unsold units, the center is set to witness an additional $11 million loss in profits.  One plan is to lease 200 of the condos while another is to make City Center more livable by installing a grocery store.

These financial problems co-inside with complaints from customers who say the casino is too dark as well as other design faults.  I believe that this center was built at a completely wrong time in American society.  With the economy still reeling from the crash, people are clearly not making to trips to Las Vegas regularly and spending thousands of dollars to stay the night.  I think that this center should try to target international waters because they might be looking for an experience they could provide.  I believe that it is going to take a very long time before the hotel is going to see a complete pick-up in revenue and for now they are going to have to search for ways to maintain their creation.

Developer Recaptures a Maritime Motif

"Frank Fusaro, of Handel Architects, embarked on a historical reclamation mission of sorts when he took on the job of designing the new Dream Downtown hotel now taking shape in Chelsea with its distinctive punched-out porthole windows"(Rubenstein). Now a developer by the name of Sant Singh Chatwal is converting the annex into a $230 million, 316-room hotel scheduled to open this spring.

After Mr. Chatwal bought the annex for $70 million in late 2007, Mr. Fusaro designed the plan to cover the building in stainless steel tiles fabricated in Kansas City with a special-made coating dubbed the Dream Finish: "it's polished enough to reflect the blues and whites from the sky overhead, but not so reflective as to mirror passersby" (Rubenstein).

In today's recession, consumers are seeking high quality hotels for lower prices. This annex that Mr. Chatwal purchased will prove to fit that standard. He turned the old hotel into a $230 million, 316-room hotel. The hotel industry has been a very competitive industry lately in the United States. Companies differentiate themselves from each other by having different promotions, offering special rates, and basically become the best they can be. For this key industry player, after purchasing the annex for $70 million, he has invested a lot into the annex in hopes of achieving big things in the near future when it becomes operational.

http://online.wsj.com/article/SB20001424052748703708404575586591685653962.html#articleTabs%3Darticle

Big Chains Try Food Trucks

A new trend in the restaurant industry is that a small number of chain restaurants are appearing around the city with their own food trucks.  Vans/trucks come fully equipped with an entire working kitchen.  Customers have little difficulty tracking the mobile unit with sites like Twitter and Facebook, who make their whereabouts easily accessible.  It seems as though customers appetites are expanding "food-on-the-go" and there is an increasing demand for bigger chains to appear with their own truck, which seems to be in the works.  Tasti D-lite is an example of one brand already on the move with plans to increase their number of trucks on the road from 1 to around 10.


Franchisors are also investing in food trucks to promote their upcoming opening of stores. While some cities have restrictions about where the vans can park themselves many do not and trucks are able to pull up  anywhere.  But there is some risk in sales if the weather acts out. For example, Thomas S. Jones and his sister employ "two food trucks to supplement sales for four Cousin Subs restaurants they own in south Wisconsin."  They further explain that they have regular customers who expect the vehicle to show up at the corner, in the park, or by an office building.  He goes on to explain that "I treat those trucks like a store, never once have I not put them out there."  as total sales from this venture account for 5% to 10% of all revenue for the business.


In my opinion this is an innovative idea for restaurant chains.  It is making their businesses more accessible to customers who might be on the run and looking for a quick fix.  I am interested to learn who are the bigger chains that are considering experimenting with this new trend.   These trucks are a simple way to increase revenue as well as expand the customer base of the restaurant.  I believe this will be a lasting innovation.

Wyndham Earnings Rise 50%

According to an article by the WSJ, "Wyndham Worldwide Corp.'s third-quarter earnings rose 50%" This can be accredited to two main factors: a tax benefit and higher demand from the previous year. In July, the "boost forecast" for the company was from $1.78 to $1.88. However, Wyndham raised its "earnings guidance" from $1.94 to $1.98 - well above what was expected in July. Furthermore, according to Thomson Reuters, "[Wyndham Worldwide Corp.] also sees 40 cents to 44 cents this quarter, while analysts' average projection was 40 cents." Wyndham Worldwide Corp. as well as other hotels are seeing this change because tourism demands are on the rise. It should also be noted that "prior cost cutting" of hotel rates is also causing this reaction.

A year earlier, Wyndham Corp reported a profit of $104 million, whereas this year the company reported a profit of $156 million. The revenue of the company increased to $1.07 billion - by a 4.8% increase. The article also states that "revenue per available room" is an important indicator of industry performance. Wyndham's revenue per available room rose 6.7% after a 17% slump last year.

Lately, I have been reading articles about the hotel industry starting to climb back up the ladder since the recession. I believe this article is a great indicator or this climb. The article also notes the Marriot International Corp, saying its timeshare business continued to rebound during the third quarter. Hopefully this trend will continue amongst the competitors in the hotel industry. Looking through this article and previous articles and the given statistics, the industry has really suffered because of the recession. It will be interesting to see what happens over the next few weeks with the hotel industry, especially because of the upcoming holiday season.

Hawaii Local's Inside Play

A Hawaiian condominium converter by the name of Peter Savio recently purchased Honolulu's fading Pagoda Hotel for a mere $7 million. The price that he paid for the 359-room hotel is deceiving. The Pagoda, like hundreds of other buildings in Hawaii, sits on land leased from a trust established more than a century ago by a descendant of the ruler who united the major Hawaiian islands (Sadovi). When the property was put on the market its value was greatly reduced because the hotel's lease had less than 10 years to run.

The Pagoda was developed in the 1960s by Herbert T. Hayashi, a Hawaiian developer who died in 2005 (Sadovi). He created the property after seeing a need for an affordable hotel for locals. It is located in a residential neighborhood several blocks from the beach. This helped keep the rates lower than many beachfront hotels aimed at tourists from outside Hawaii. The daily room rates are in the $80 range. A spokeswoman for Mr. Hayashi's HTH Corp. declined to comment about why the property was sold, but some analysts said the company may have begun reassessing its portfolio in the wake of Mr. Hayashi's death (Sadovi).

The purchase of this Pagoda also comes in at a good time as the Hawaiian hotel market is recovering from the financial crisis. This year through September, hotel occupancies in Hawaii have risen to about 71.2%, from about 65.2% in the year-earlier period, according to Smith Travel (Sadovi). The Pagoda, in its prime, might have had a price in the $16 million range before the downturn. Mr. Savio plans to spend about $6 million in the next few years updating the hotel, starting with its restaurant kitchens.

This was a great buy for the 63-year-old Mr. Savio is a Hawaiian who closed his first real-estate deal at the age of 15. The low room rate should spark travelers from all over the United States with less money to visit Hawaii and stay in this hotel. Mr. Savio is also considering renting out some free rooms to college students which will make college more affordable for them.

http://online.wsj.com/article/SB10001424052702303891804575576251175316696.html?KEYWORDS=restaurant

New Trust In the Restaurant Industry

Venmo is a new app on iPhones and Androids that allow you to link a credit card to your phone, and transfer money right there to your friends accounts. You can simply send them money on your phone, and it will take it out of your account and put it in theirs. They also created a feature called "trust" that allows you to take money from friends accounts without permission.

So where does this fit into the restaurant industry? A restaurant in New York City called the Simple Kitchen is using this new Venmo app and even the trust feature. Regulars who eat at the restaurant frequently are getting up and leaving without asking for the bill after, "trusting" the restaurant to take the money out of their account.

I think that the use of this app in the restaurant industry can gain support by customers if Venmo became commonly used. However, I do not think that this will ever happen since it is hard to trust anyone with access to your bank account these days. If people were not so decieving and people were able to trust, I think that this would help restaurants since time is a major issue. People do not always have time to sit down, eat, and wait for the check, resorting to more fast food. However, by not having to wait for the check, people could take time off their visit and sit at restaurants more often.

http://bits.blogs.nytimes.com/2010/20/25/venmo-wants-its-users-to-trust-each-other/?scp=3&sq=restaurant%20industry&st=cse

New Hotels in NYC

According to a WSJ article posted today, hotels are being built in many unconventional locations within New York City. This is because, "New York is a very, very hot market and everybody wants to be there," according to Jan Freitag, vice president of Smith Travel Research Inc. in Hendersonville, Tenn., a hotel-data provider. As of now, there are 19 new hotels under construction in the outer boroughs (Staten Island, Long Island, Brooklyn, etc.) It should also be quoted that "the hotel wave is coming more than a decade after the 1998 opening of the New York Marriott at the Brooklyn Bridge, Brooklyn's first new luxury hotel in a half century."

In June, a 321-room, full service Sheraton Brooklyn New York hotel opened. Aloft Brooklyn, considered a luxury hotel, will be opened in January around the same area. These are operated by Starwood Hotels & Resorts Worldwide. There will also be openings of full service hotels by 2012 near the new Nets arena in Brooklyn.

Limited-service hotels are also trying to make their way into the city. Comfort Inn and Holiday Inn Express are building hotels near subway and railroad stations, as well as near hospitals and airports. Intercontinental Corp., a big name in limited-service hotels, is opening 14 new hotels within the 5 boroughs over the next few years.

It should also be noted that "Companies say hotels are proliferating in the outer boroughs—and close-in suburbs, too—because of rising demand from business and leisure travelers for affordable lodging outside Manhattan, as well as for meeting and banquet facilities" An example is the Days Inn in Long Island City. This hotel is about 15 minutes from Midtown Manhattan as well as less than a half-hour subway ride from downtown Flushing, CitiField and the USTA National Tennis Center. However, this hotel is much less expensive than a hotel within Manhattan.

I think this is a great opportunity for the hotel companies that take it. It makes more sense to build hotels outside of NYC for the people who want to visit the city but cannot afford to have a hotel for 6 nights in the middle of Manhattan. It is also smarter than building more hotels in NJ because the price of hotels in NJ are very high, because of its proximity to NYC. Also, the cost of traveling back and forth from NJ to NYC everyday will cost more than staying in a hotel in one of the five boroughs, excluding Manhattan.

http://online.wsj.com/article/SB10001424052748704300604575554193765198142.html

The Big City's Big Change

The newest addition to New York City, The Setai Fifth Avenue is, according the Wall Street Journal, "hotel and condo at East 36th Street that's scheduled to open for hotel guests on Nov. 1" (The Wall Street Journal Online). Even though the building is adjacent to the Empire State Building, and located on the intersection of posh Fifth Avenuel; it is an area typically occupied by tourists. That is not necessarily negative, however, the chairman Davide Bizzi, of "Italy's Bizzi & Partners Development"- believe this is, "a location that should improve...[the Setai Fifth Avenue is]...helping with that" (The Wall Street Journal Online).

Thus, New York City brokers believe that the contracts between "$2,000 and $2,300" (The Wall Street Journal Online) a square foot is overpriced for what the land is worth. Prudential broker Douglas Elliman estimated the value to be "$1,600 a square foot" (The Wall Street Journal Online), and that would be the price that he would bring customers over to see the condos. This means that he feels a condominium that is 10,000 square feet should be around $16 million, not $20 to $23 million. However it does not matter what seems like a fair price, but what consumers are willing to pay. According to the article, of the 184 condominiums, " Nearly half the Setai's condos are in contract, most of them all-cash deals to overseas buyers..." (The Wall Street Journal Online). Even though, Bizzi & Partners Development might not be doing the ethical business contract, in the end they need to make a profit, to pay off the debt, and sell these condos.

First off, as previously mentioned, I am disgusted by the unethical behavior of overpricing these condominiums and likely the hotel rooms, and how it is allowed. This will change the area's atmosphere to make the everyday tourists not feel welcomed. Another problem I have is that, Bizzi and his executives assume this will do well. They assume that restaurants and shops will want top open up because this intricate building is located in an area that has not been taken over by the rich? I think that is absurd. What if there is another swine flu, and the foreigners decide to terminate their contracts? During the swine flu outbreak many foreigners feared coming to our country, and this could easily happen again. Then Bizzi will be stuck in a large amount of debt.

http://online.wsj.com/article/SB10001424052748703673604575550463496233810.html

Las Vegas and the Hotel Industry

Although most hotels have been seeing a turn around from this recession, Las Vegas has failed to see the end of it. This has been the worst economic fall for Las Vegas since the creation of casinos in Nevada in the 1940s.

Although economists are still hopeful that casino revenue will bounce back soon, they doubt that it will be able to make up for the fall of the construction industry which is a huge part of Las Vegas' success.

Unemployment in Las Vegas is at about 14%, whereas 10 years ago, it was at just about 4%. The Plaza Hotel and Casino has just announced that they are planning on laying off 400 workers and closing off parts of the hotel and casino for renovation, a common trend in hotels these days. (Nagourney)

Gaming revenues have been declining for the past three years and are continuing to. This is a result of the decreased recreational travel and gambling during recessions. Economists also believe the baby boomer generation is less likely to gamble because of belief that there will be a lack of retirement funds. (Nagourney)

It is tough to say that the hotel and casino industry in Las Vegas will pick up as soon as the economy does because people have not been saving much money during the recession. We have seen turnarounds in the hotel industry caused by business travel. This may be a large reason why things have not been looking any better in Las Vegas. Las Vegas is a huge recreational vacation and tourist spot, rather than business. However, I do think things will slowly begin to turn around as people's expectations for the economy go up.

http://www.nytimes.com/2010/10/03/us/03vegas.html?_r=1&scp=7&sq=hotel%20industry&st=cse